Pennsylvania Industrial Development Authority PIDA

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Pennsylvania Industrial Development Authority
(PIDA) Low-interest loans to non-profit IDCs to
assist companies in creating or retaining jobs.

• Types of Loans
• - Single Tenant
• - Multi-Tenant
• - Industrial Park
• Eligible Businesses
• Manufacturing Industrial Computer Centers
  Research and Development Facilities
  Agri-business KIZ Companies
• Ineligible Businesses
• Service Commercial Retail
• Eligible Uses of Funds
• Acquisition Renovation Expansion New
  Construction
• Exceptions
• Projects located in targeted areas (KOZ, EZ,
  Brownfield) are eligible for up to 2.25 million
  and received the lowest interest rate

• Interest Rates
• 3 fixed
• (Based on area unemployment rate or targeted
  area or industry sector)
• Rates will increase and decrease as the Federal
  Reserve adjusts its rates
• Loan Limits
• - 15 year term
• - Participation rate ranges from 30 to 75
  (based on unemployment rate)
• - 2 million maximum loan amount/2.25 million
  maximum in targeted areas
• - Cost per job 35,000
• - No less than 2nd mortgage lien on property to
  be financed
• Applying for a PIDA Loan
• Single Application for Assistance submitted
  through local industrial development corporation
• Questions
• Contact CBF at [phone]

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Machinery and Equipment Loan Fund
(MELF) Low-interest loans to companies to assist
in creating and/or retaining jobs.

• Eligible Businesses
• Manufacturing Industrial Agri-business
  Mining Operations Production Agriculture
  Hospitals Information Technology
  Biotechnology
• Ineligible Businesses
• Service Commercial Retail
• Eligible Uses of Funds
• Acquisition and installation of new or used
  machinery and equipment which is directly related
  to the business process
• Upgrading of existing machinery and equipment
  which is directly related to the business process
• NOT Eligible Repair costs for existing
  machinery and equipment, and cost of company
  labor for installation
• Interest Rates
• 3

• Loan Limits
• 5,000,000 or 50 of total project cost
  (whichever is less)
• Term
• Up to 10 years
• Job Requirements
• 25,000 loaned 1 full-time job retained/created
  at site within three years from closing date.
  Does not apply to loans to production agriculture
  enterprises
• Applying for a MELF Loan
• Applicant will complete the Single Application
  for Assistance and forward to DCED, Loans
  Division
• Questions
• Contact CBF at [phone]

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Small Business First Program (SBF) Provides
low-interest loan financing to small businesses.
As amended by SB 778

• Eligible Businesses
• Agri-business and Production Agriculture
  Industrial Manufacturing Hospitality and
  Defense Conversion Construction Recycling
  Computer Services For profit or Nonprofit Day
  Care Centers
• Eligible Use of Funds
• Land Buildings Machinery Equipment
  Working Capital
• Ineligible Use of Funds
• Refinancing existing debt Costs incurred
  prior to approval of SBF loan Brokers
  Consultant fees
• Terms
• Real Estate 15 years M E 10 years
• Working Capital 3 years
• Interest Rates
• 3

• Collateral
• Loans must be secured at the highest lien
  position available on one or more assets
• SBF may require personal guarantees of
  principals
• Limitations
• Business must have 100 employees or less
• Maximum Loan amount, 200,000 or 50 of project
  cost, whichever is less (working capital loans,
  100,000 or 50 of project cost, whichever is
  less)
• Project must create/retain at least one job for
  every 25,000 borrowed (does not apply to
  farmers)
• Applying for a SBF Loan
• Single Application for Assistance submitted
  through area loan organization
• Questions
• Contact CBF at [phone]

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Community Economic Development Loan Program
(CED) Low-interest loans to small business
enterprises in distressed areas that will enhance
the economic well-being of a community or
neighborhood.

• Eligible Businesses
• For-profit business with 100 or less full-time
  employees
• Mercantile - Commercial Retail
• Business must demonstrate a positive, direct
  community impact and be located in a distressed
  community
• Eligible Use of Funds
• Land and building, machinery and equipment and
  working capital
• Ineligible Use of Funds
• Refinancing
• Related party transactions

• Interest Rate
• 2 fixed
• Loan Limits
• Maximum loan amount is 100,000 or 50 of
  project cost (whichever is less)
• Job Requirements
• Retain jobs in existence as of the date of the
  loan application
• Applying for a CED Loan
• Submit LOI to DCEDIf accepted, the applicant
  will be invited to submit a Single Application
  for Assistance through their local ALO or CDFI
  for assistance

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PA Minority Business Development Authority
(PMBDA)

• Eligible Applicants
• For profit business owned/controlled by one or
  more socially or economically disadvantaged
  residents of PA
• Includes, but not limited those who are at least
  18 years of age and who are
• African American
• Hispanic American
• Asian American
• Native American
• Eskimo
• Aleut
• Other Requirements
• Sole proprietorship, partnership or corporation
• Willing to commit full-time management and
  control
• Applicant must control at least 51 of ownership
• Commonwealth residency must exist at time
  application submitted or must certify that
  residency will be established on or before the
  closing of the loan

• Loan Amount Rate
• PMBDA will fund a maximum of 75 of eligible
  project costs
• Loan amounts
• 25,000 minimum
• 250,000 maximum
• 350,000 if located in DCED designated Enterprise
  Zone or located within a redevelopment area
• 500,000 for industrial enterprise, manufacturing
  enterprise, advanced technology, regional or
  national franchise, international trade, or
  business acquisition if these projects are
  located in a DCED designated Enterprise Zone or
  located within a redevelopment area the maximum
  amount is 750,000
• Interest rate will be no more than one-half the
  prevailing prime rate, but not less than 4

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PA Minority Business Development Authority
(PMBDA)

• General Program Requirements
• One full-time job created or preserved within 3
  years from completion of the project for each
  15,000 loaned from PMBDA
• Loan security
• Loans must be secured at the highest lien
  position available on land, buildings machinery
  equipment, accounts receivable, and inventory
• Although we have historically done so, we would
  prefer not to use personal residences as
  collateral
• Personal or corporate guarantees, or other types
  of collateral may be required
• Life insurance policy in the amount of the loan
  with PMBDA as beneficiary is required

• Eligible Use of Funds
• Land
• Buildings
• Machinery Equipment
• Working Capital
• Terms
• Land Buildings up to 10 years
• Machinery Equipment up to 7 years
• Working Capital up to 3 years
• In projects where two or more uses of PMBDA funds
  are planned, loan terms may be blended

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PA Minority Business Development Authority
(PMBDA)

• RLFCP Loan Recipients
• Progress Fund (West/NE PA, including Erie) -
  200,000
• Community Loan Fund of SW PA (15 Western PA
  Counties) - 400,000
• Capital Region Economic Development Corporation
  (Central PA) - 400,000
• Lehigh Valley Economic Development Corporation
  (Allentown, Bethlehem Easton) - 200,000
• African American Chamber of Commerce of PA, NJ
  DE (Philadelphia Area) - 200,000

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First Industries Program - Agriculture Tourism

• Eligible Tourism Activities
• Tourism people traveling for pleasure
• Destination tourism sites, i.e. historical,
  cultural, sporting, amusement, outdoor
  recreational
• Hospitality establishments serving a destination
  site
• Tourism activities that generate overnight stays
• Activities that optimize or enhance state parks,
  forests, or game lands

• Eligible Agriculture Activities
• Production Agriculture Farms
• Food Processing
• Wholesalers of Farm Commodities
• Urban Rural Supermarkets
• Farmers Markets
• Energy-related activities impacting production
  agriculture or agribusiness
• Activities which implement best practices related
  to agriculture waste products

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First Industries Program - Agriculture Tourism
Planning Grants Provides grants to businesses for
assistance with their capitalization or working
capital needs.

• Eligible Applicants
• For profit or nonprofit entities as determined by
  the Commonwealth Financing Authority
• Eligible Uses of Funds
• Predevelopment activities and feasibility studies
  associated with an agriculture project
• Fund Limits
• Maximum grant amount, 250,000
• Total amount of planning grant funds that may be
  awarded for agriculture or tourism projects, 10
  million

• Requirements
• Project for Tourism Planning Grant must meet at
  least one of 4 specified criteria and at least
  one of 5 for the Agriculture Planning Grant
• Any reports prepared will be provided to the
  Commonwealth Financing Authority and made
  available to the public
• Applying for planning grants
• Submit a single application to the Commonwealth
  Financing Authority
• Questions
• Contact the Center for Private Financing (717)
  783-1109

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First Industries Program - Agriculture Tourism
Under Small Business First Machinery and
Equipment Loan Fund

• Eligible Applicants
• For-profit companies that meet the general
  eligibility requirements of SBF and MELF and that
  meet the definition of an agriculture or tourism
  enterprise
• Eligible Uses of Funds
• SBF land building, machinery equipment,
  working capital
• MELF machinery equipment
• Fund Limits
• SBF - 200,000 (100,000 working capital)
• MELF - 5 million when new guidelines published

• Requirements
• Project must meet the requirements of the SBF and
  MELF programs
• Applying for Loans
• SBF Applicant applies through Area Loan
  Organization
• MELF Applicant applies to DCED through
  submission of a Single Application for
  Assistance
• Questions
• Contact the Center for Business Financing (717)
  787-7120

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Export Financing Program (EFP) Designed to
increase the level of exports and number of
exporting companies in PA.

• Eligible Applicants
• Businesses that need financing for specific or
  multiple export transactions that have 250
  employees or less
• Must be in operation but not necessarily
  exporting for a least 12 months
• Eligible Uses of Funds
• Working Capital Acquire Inventory pay for
  direct or indirect costs used for the manufacture
  or purchase of goods, or for the provisions of
  services Support Standby Letters of Credit used
  as bid bonds, performance bonds or payment
  guarantees
• Accounts Receivable Finance accounts
  receivable up to 180 days from the date of
  arrival at the port of importation

• Loan Amount/Rate
• Maximum amount 350,000 Rate 3.75
• Terms
• Working Capital 12 months
• Accounts Receivable Repayment is due when the
  receivable is paid or 180 days after
  disbursement, whichever is sooner. Lines of
  credit for multiple transactions are available
  for 12 month period
• Condition All loans will have either an Export
  Import Bank guarantee or credit insurance
• Applying for EFP
• Contact either the SBF office [phone]
• -or-
• Team PA Export Network Region Provider
• [phone]

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Pollution Prevention Assistance Program (PPAP) To
assist PA small businesses enterprises to
implement pollution prevention and
energy-efficient projects.

• Eligible Businesses
• A for-profit corporation, LLC, partnership,
  proprietorship or other business entity that has
  no more than 100 total employees and operates
  from a stationary source
• Eligible Uses of Funds
• Adopt or install pollution prevention or energy
  efficient equipment or processes directly related
  to the business activity of the small business
  enterprise
• Ineligible Use of Funds
• Refinancing existing debt less than arms
  length transactions Equipment that focuses on
  recycling or pollution control rather than
  prevention, i.e. scrubbers, dust collectors
  Projects that have commenced prior to DCED
  approval

• Rate and Terms
• Annual fixed rate of 2. Term of loan can be
  up to 10 years or the life of the asset
  (whichever is less)
• Loan Amount
• 100,000 or 75 of TPC (whichever is less)
• Matching lending sources must have equivalent of
  longer terms
• Applying for a PPAP Loan
• Complete Single Application for Assistance
  (DCED) through their local ALO or CDFI
• Complete Determination of Eligibility
  Application (DEP)
• Questions
• Contact SBF at [phone]

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Opportunity Grant Program (OGP)

• Eligible Applicants
• Private Companies and Municipalities IDAs
  Municipal Authorities RDAs Private Developers
  on behalf of Private Companies
• Eligible Uses of Funds
  Construction/rehabilitation of infrastructure
  Site preparation Acquisition of land and
  buildings Upgrade of machinery and equipment
  Working capital Job training Environmental
  assessments Remediation of hazardous materials
• Fund Limits
• 41 Match
• Funds based on economic impact to an area/region
  Job retention/creation Private Investment

• Job Requirements
• Create/preserve a minimum of 100 full-time jobs
• -OR- Increase PA employment at lest 20 -OR-
  Provide substantial number of new employment
  opportunities in high-growth industry
• Other Requirements
• Private companies must locate, expand or
  maintain operation in PA for 5 years Base pay
  of at least 150 of minimum wage LOI must
  include written commitment from private company
• Applying for OGP funds
• Submit LOI as outlined in program guidelines
• Questions
• Contact CBF at [phone]

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Customized Job Training Program (CJT)

• Eligible Applicants
• LEAs IRCs Greenhouses Local workforce
  investment boards Private Companies IDCs
  Labor unions
• Eligible Costs
• Salaries and benefits for instruction and
  curriculum development
• Instructional supplies, consumable materials,
  and software
• Tool and equipment rental directly applicable to
  the training tuition reimbursement if trainee
  completes the course
• Ineligible Costs
• Capital improvements wages, salaries, or
  benefits of trainees and employees not involved
  in conducting the training travel expenses of
  trainees unless waived by DCED

• Program Requirements
• CJT funds for up to 75 of eligible training
  costs
• Trainees must earn 150 of federal min. wage.
• Training for PA residents only
• Company may not receive more than 2 consecutive
  years of grant funding, and no more than 3 years
  out of 5
• 25 of funds are set aside for small business
• No more than 10 of funds to one company,
  greenhouse or labor organization
• Applying for a CJT Grant
• Submit Single Application for Assistance
• Questions
• Contact CBF at [phone]

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Job Creation Tax Credits (JCTC) Provides tax
credits to businesses to stimulate job creation

• Fund Limits
• 1,000 tax credit for each job created.
• Job Requirements
• Job creation is measured from a start date which
  is the first day of the calendar quarter in which
  an application is submitted.
• Must create at least 25 full-time jobs, or have
  a 20 increase in employment at the project site
  within 3 years of start date. New jobs must pay
  150 of minimum wage, and business must maintain
  operations at project site for 5 years.
• Applying for JCTC Credits
• Submit Single Application for Assistance to
  DCED.
• Questions
• Contact CBF at [phone]

• Eligible Applicants
• Any Business
• Participant Criteria
• Business must create a specific number of jobs
  within 3 years.
• Must demonstrate leadership in application,
  development or deployment of leading technologies
  and financial stability
• Eligible Uses of Funds
• Tax Credits may be applied to business
  corporate net income tax, personal income tax,
  capital stock and franchise tax, gross premiums
  tax, gross receipts tax, bank trust business
  tax, mutual thrift institution tax, or title
  insurance business shares tax.

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Second Stage Loan Program

• Purpose
• Provides guarantees to give banks an extra
  measure of security to encourage them to provide
  early-stage businesses in certain sectors with
  working capital financing.
• Eligible Applicants
• Manufacturing, Advanced Technology and Life
  Sciences. Only companies which are no less than
  2 but no more than 7 years old.
• Type of Assistance
• Guarantee. First 2 years 50 of outstanding
  principal amount up to 1 million. Years 3
  through 7 25 of outstanding principal amount.

Eligible Uses of Funds Primarily for working
capital, but also asset financing needs. Job
Requirements None. Applying for Second
Stage Must apply through commercial bank that
has enrolled in the program. Questions Contact
CPF at [phone]
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First Industries Loan Guarantee Program

• Purpose
• Provides guarantees to lending institutions to
  undertake projects related to agriculture and
  tourism within Pennsylvania.
• Eligible Applicants
• An eligible applicant for a loan guarantee may
  be a for-profit business enterprise or a
  non-profit organization that is engaged in either
  agriculture-related activities or tourism-related
  activities, as defined in the Guidelines.
• Eligible Uses of Funds
• Most activities associated with agriculture and
  tourism-related projects.
• Other Requirements
• All projects must have been awarded a First
  Industries planning grant or show that at least
  1 million of private funds is being invested in
  the project. Effective immediately and ending
  June 30, 2011, the minimum for private funds
  invested will be 500,000

Type of Assistance Guarantee 50 of outstanding
principal amount up to 2.5 million. Agriculture
Projects only Ending June 30, 2011, applicant
may request a guarantee of 51 to 90 of the
principal amount. This is subject to a one-time
fee of 2 of the loan multiplied by the
percentage of the guarantee being requested.
Job Requirements None. Applying for First
Industries Guarantee Must apply through
commercial bank, CDFI (Community Development
Financial Institution) or Farm Credit System
institution that has enrolled in the
program. Questions Contact CPF at (717)
783-1109
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Pennsylvania Capital Access Program (PennCAP)

• Purpose
• Small business loan guarantee program designed
  to help borrowers that dont quite meet a lending
  institutions normal small business lending
  requirements.
• Eligible Applicants
• Most businesses in Pennsylvania, including
  start-ups. Businesses receive the loan directly
  from one of the lending institutions enrolled in
  the program.
• Type of Assistance
• Guarantee. 100 of outstanding principal amount
  up to 500,000, based on amount available in the
  lending institutions reserve account. All terms
  and collateral requirements are determined by the
  lending institution.

Eligible Uses of Funds Purchase of land,
building, equipment and working capital. Job
Requirements None. Applying for Second
Stage Must apply through commercial bank, CDFI
(Community Development Financial Institution) or
Farm Credit System institution that has enrolled
in the program. Questions Contact CPF at (717)
783-1109
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Pennsylvania Economic Development Financing
Authority (PEDFA)

• Type of Assistance
• Tax-Exempt and Taxable Bond financing program.
  Provides financing for most kinds of projects at
  attractive interest rates.
• Eligible Applicants
• Most businesses in Pennsylvania. Manufacturing,
  501(c)(3) Nonprofit, and Exempt Facilities
  projects generally qualify for tax-exempt
  treatment. Tax-exempt eligibility must
  ultimately be determined by Bond Counsel. Most
  projects that do not qualify for Tax-exempt
  financing will qualify for Taxable financing.
• Structure of Financing
• Composite Pool Up to approximately 10 million.
  All projects are backed with a letter of credit
  from a bank. Process is standardized and on a
  set schedule. Variable interest rate. Pools
  fund in April, August and December.
• Stand-Alone Projects approx. 10 million and
  up. Each project has its own structure and
  timetable.

Eligible Uses of Funds Land and building
acquisition, construction, rehabilitation,
equipment, closing costs. Certain conditions also
apply to tax-exempt funds. Taxable projects can
also fund working capital. Applying for
PEDFA Must apply through a local Industrial
Development Authority (IDA) or Industrial
Development Corporation (IDC). Questions
Contact CPF at [phone]
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What is Venture Capital?

• A unique type of business finance
• No cash flow? No assets? NO PROBLEM!
• An exchange of cash (from the VC) for ownership
  (from the entrepreneur)
• High risk / High reward

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This scruffy group VC 258 Billion
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Why is it Important?

• Huge value creation from an economic rounding
  error
• Venture Capital investments share of GDP 0.2
• Venture-backed firms share of GDP 16.6
• Employment at those firms 10,000,000
• Revenues at those firms 2,100,000,000,000

Source BLS website, Investment Company
Institute, Thomson Financial, NVCA
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How is DCED Involved?

• 3 Programs 1 Goal Abundant risk capital in PA
• BFTDA Venture Investment Fund (/- 2M yr)
• Early stage regional initiatives
• CFA New PA Venture Investment Program (60M)
• First time (PA) funds, early stage, new
  relationships
• CFA New PA Venture Guarantee Program (250M)
• Established PA funds, new relationships

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Whats the status of these programs?

• BFTDA Venture Investment Fund
• 17 investments 39.3M
• 3 commitments 7M
• CFA New PA Venture Investment Program
• 12 investments 34.7M
• 2 commitments 6M
• 19.3M remaining (6 prospects)
• CFA New PA Venture Guarantee Program
• 8 commitments 190M
• 60M remaining (8 applications)

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Whats the status of these programs?

• VC Relationships/Invested 31 / 74M
• Funds under management 2.3 Billion
• PA Companies invested 124
• Dollars Invested 435,856,706
• Dollars Leveraged 1,235,174,679
• Jobs Created/Retained 4,251
• Median Wage 76,398

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Some Successes

• BFTDA Venture Investment Fund
• MAG Pittsburgh Equity Partners
• CFA New PA Venture Investment Program
• Originate Ventures
• NextStage Ventures
• CFA New PA Venture Guarantee Program
• Chrysalis Constellation

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PA VC Investments in 2005
Source PricewaterhouseCoopers/Venture
Economics/National Venture Capital Association
MoneyTree
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PA VC Investments in 2006
Source PricewaterhouseCoopers/Venture
Economics/National Venture Capital Association
MoneyTree
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PA VC Investments in 2007
Source PricewaterhouseCoopers/Venture
Economics/National Venture Capital Association
MoneyTree
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PA VC Investments in 2008
Source PricewaterhouseCoopers/Venture
Economics/National Venture Capital Association
MoneyTree
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• NVCA Global Insight Study (released 3/21/07)
• PA is 3 in the nation for employment at
  venture- backed companies
• PA is 1 in the nation for rate of employment
  growth at venture-backed companies
• Entrepreneur Magazine (Aug 2008 issue)
• - PA is 3 in the nation for the most active
  early stage VCs resident in state.